Good artcile from the Guardian covering the main areas around us and some input from our very own Mark Shore!

Champions Gate is about 12 minutes’ drive from Disney World in Orlando, off Interstate 4. Its 900 acres are a busy building site that will soon be covered by 3,200 new homes. Smooth green turf now covers a golf course abandoned half-built when the property bubble burst in 2007. The good times appear to be back.

Similar projects are appearing across the state. Construction is picking up, carmakers are celebrating the return of truck sales, and house prices are rising. The US finally seems to be emerging from the worst property crash in living memory. Below the surface problems remain, but here in Florida the sun is shining again.

Mark Shore, who works for estate agent Florida Horizons in Orlando, lived through the boom and the bust. He arrived in the US from Britain in 2003 to work as a mortgage broker. As the property market took off, he says, people, including himself, were “swept away”.

“You sort of think it’s too good to be true, and it was, but everyone was so caught up in it,” he says. “Everyone was doing it. Financing was so easy. People just signed a bit of paper. Builders would have queues outside their door when they opened new developments.”

When the bust came in 2007, financing dried up overnight. House prices collapsed. A four-bedroom, three-bathroom home that would have gone for $350,000 in 2006 fetched just $170,000 by 2009 – if you could find a buyer. Lower down the housing ladder, life got even harder. Shore had his fingers burnt as his business collapsed and the value of his property investments tanked.

Today, buyers are back and business is picking up for Shore, now selling homes, not loans. But life is very different. He used to specialise in selling to British buyers, but they are gone, squeezed out by a strong dollar and the UK economic downturn. Brazilians are his biggest customers now. “By a mile – I’m thinking of learning Portuguese,” he says.

It’s the same story at the nearby Paradise Palms complex, where sales consultant Craig McCaskill says 30% of his clients used to be Brits; now it’s closer to 5%. Brazilians, Canadians, Norwegians and Chinese top the rapidly growing number of buyers, followed by US sun-hunters from colder northern states.

It’s not just the nationality of the buyers that is changing. Shore says two- thirds of his customers are cash buyers. There seems to be no shortage of people with $200,000-plus in cash to drop on a second home in the sun that they can rent out for extra income. “We can’t build them fast enough,” says McCaskill.

No single segment can illustrate a property market as large and diverse as the US’s, but the renaissance in Florida’s holiday-home market represents one of the brighter spots in America’s housing recovery. House prices across the US have risen for six of the past seven months, but 20% of homeowners are still “underwater” – in negative equity. Prices are still low, as are interest rates, yet few Americans have the money, or the credit score, to get back into the market.

“The mortgage market in 2013 is the same as it was in 2011 or 2012,” says Guy Cecala, publisher of trade magazine Inside Mortgage Finance. “Rates are low, underwriting is tight and a significant number of people won’t qualify for loans. That hasn’t changed.”

He estimates that a third of all home purchases are now made in cash, far fewer than in Florida, but more than the 5-10% he would expect in a “normal” environment. The resurgence is being driven by investors, and by current homeowners trading up, says Cecala. “It is a sign of a healthier market when you see existing homeowners driving new sales, but it won’t create new homeowners or absorb more supply.”

Just like in the UK, first-time buyers face the biggest problems. Those who can raise credit are competing with investors who can pay cash. On top of that, the Federal Housing Administration (FHA), the government agency that insures home loans, has tightened its criteria. The FHA was created as part of the New Deal in 1934 to encourage wider home ownership after the Depression. Burnt by the property crash, it implemented strict new rules and is pushing “more and more first-time buyers out of the market”, according to Cecala.

“First-time buyers drove the housing market in the past,” he says. “They are going to be a smaller part, but I don’t think we have created a generation of permanent renters. We have had a heavy dose of reality, but home ownership is still seen as an American right.”

Rising prices will pull some people out of negative equity: 7m homes were underwater last year, down from a high of 12m. According to JP Morgan, that could fall to 4m in two years. But that’s not enough for some, and anger remains that while the banks were bailed out, homeowners have been left largely to fend for themselves.

This month marks the first anniversary of the National Mortgage Settlement (NMS), a $25bn deal with lenders supposed to punish them for the worst excesses of the boom and help homeowners stuck in negative equity.

Brian Kettenring manages the Campaign for a Fair Settlement, which lobbies the US government for homeowner relief. He says the hardest hit are still suffering and there’s a “glaring lack of transparency” about how the funds earmarked for the poor have been spent, with minorities in particular getting a raw deal. He’s hoping for more when president Barack Obama gives his first state of the union speech since his re-election.

“More than four years since the financial crash and one year since the national mortgage settlement … there remains no justice for Wall Street and no fundamental relief for taxpayers,” says Kettenring.

Few people have watched the last real estate bubble as closely as Marc Weiss, chairman of non-profit organisation Global Urban Development and a professor at Columbia University. In the early 1990s, Weiss was Bill Clinton’s housing and urban policy adviser, overseeing the most ambitious attempt to expand US home ownership since the New Deal. The securitisation of loans – bundling them together and selling them as investment packages – looked like a great way to finance his dream.

“Bill Clinton, Bob Rubin, Larry Summers … we all thought the efficient allocation of capital was a good thing,” he says. “We saw our strategy dramatically succeed during the 1990s, then tragically unravel during the past decade.”

Securitisation brought global capital to the US home market and expanded financing for lower-income families. “This was great at the time, but by 2001 it was beginning to be distorted by greed, creating a whole new speculative bubble on a scale that we never thought possible,” Weiss says.

Compared with previous boom-and-bust cycles, the last one was nothing new, in that excessive financing and combined to drive the market to dizzy, unsustainable heights. But the global scale of this downturn was unprecedented and, Weiss says, “breathtaking”.

Some areas of the US were hit harder than others. States with open spaces and good weather, such as Florida and Arizona, attracted more speculative building, aimed at second-home buyers, who treated their purchase as an investment. The combination proved especially toxic when the market turned. But nationally, too, there was a change of thinking.

“In the past most people bought to own,” says Weiss. “Maybe it was a modest long-term investment. It was only in the 1970s and 1980s that you really started seeing people speculating – gambling on increasing values.” Now, he says, “part of these rolling regional economic cycles is a rolling speculation in real estate”.

After a bust, two things have to happen to get the housing market back on its feet, Weiss believes. First, regulation needs to be tightened up; then the public sector has to work with the private sector to pump energy back into the system. This time around, neither of those things have happened – yet. The US bailed out the banks but has not yet helped resolve the challenges facing homeowners.

Regulation of the housing market remains largely unchanged. “In part,” says Weiss, “it’s a reaction to the right-wing push for fiscal austerity, opposing regulations, promoting budget cuts.”

The market is now improving: affluent and second-home buyers are back, and markets are stabilising.

“But many homeowners are still underwater,” he adds. “We need a rethink of how home financing is done … I think a significant public policy shift will begin to occur: major reforms are on the horizon, and home ownership will bounce back, as it has many times before.”
SIGNS OF LIFE?

■ US home prices rose for a 10th consecutive month on a year-on-year basis in December. The US CoreLogic home price index rose 0.4% from the previous month and added 8.3% compared with December a year ago – the biggest jump since May 2006.

■ The CoreLogic data showed 46 of 50 states registering gains for the year.

■ The five states with the biggest house price increases were Arizona (up 20.2%), Nevada (15.3%), Idaho (14.6%), California (12.6%) and Hawaii (12.5%).

■ The S&P/Case-Shiller US house price data, which monitors 20 cities, showed prices up 5.5% between November 2011 and November 2012 – the strongest increase for six years.

■ CoreLogic data shows prices in Las Vegas, where 60% of homes are in negative equity, up 14% in the past year.

■ According to the Miami Association of Realtors, the number of home sales in Miami during 2012 set a new record.

■ California realtors say it took an average of 38 days to sell a family home in December, down from 59 days a year earlier.

Bill Cowie

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